Koreans foreign stock holdings jump to record $545.4 bn

South Koreans’ foreign stock holdings jumped 50% to an all-time high as retail investors sought high returns from US shares whose gains ramped up the value of the holdings.

The holdings are expected to support the ailing won currency since volatile global financial markets may prompt those investors to sell overseas assets including foreign shares and repatriate the proceeds home.

The balance of foreign equity securities held by South Korean institutional and retail investors increased 49.9% to a record $545.4 billion as of end-June from $363.8 billion a year earlier, according to the international investment position data from the Bank of Korea on Aug. 19.

Compared to the end of March, the balance grew 9.1%. Domestic investors bought $13.6 billion in overseas stocks during the three months, while the value of the holdings increased $31.8 billion on record-breaking US shares. The Nasdaq rose 9.5% in the second quarter after a 2.8% growth in the first.

Investors have been seeking higher yields and returns from overseas investment since the Bank of Korea cut its policy interest rate to a record-low of 0.5% in May 2020.

They focused on Nasdaq-listed technology stocks. The top pick was Tesla Inc. as they bought a net $4.2 billion in a year to June, according to the Korea Securities Depository’s (KSD) data. South Koreans also purchased a net $2.3 billion in Apple Inc., $530.9 million in Amazon.com Inc. and $530.1 million in Palantir Technologies. Taiwan Semiconductor Manufacturing Company (TSMC) was also their favorite with net purchase of $515 million.

South Koreans have been steadily increasing investment in foreign stocks. The balance of foreign equity securities rose to $463.7 billion as of end-2020 from $347.3 billion a year earlier and $260.9 billion as of end-2018.

Write to Ik-Hwan Kim at lovepen@hankyung.com
Jongwoo Cheon edited this article.